Indemnity Insurance of Deed of Postponement Lender conveyancing requirements
Godiva Mortgages and RBS, like many lenders, dictate their own requirements when it comes to deed of postponement indemnity insurance. This page sets out to enlighten conveyancing firms on the various mortgage company conveyancing panel where the title to be charged includes deed of postponement. Lawyers are advised to familiarise themselves with the CML handbook requirements for each mortgage company, whether it be Halifax, Yorkshire Bank Home Loans or HSBC. The content on this page is not focused on deed of postponement indemnity insurance requirements.
Need help with deed of postponement indemnity insurance from your lender?
Barclays and Leeds Building Society in common with the majority of lenders, instructions are such that where deed of postponement indemnity insurance is to be put on risk:
- your practice is required to disclose to the insurer all relevant information which you have obtained
- the deed of postponement indemnity insurance policy should always be in favor of the mortgage company and, if possible, for the benefit of the borrower and any subsequent owner or mortgagee. Where the borrower will not be covered by the deed of postponement indemnity insurance policy, you must advise the mortgagor of this fact.
- the deed of postponement indemnity insurance policy must not contain terms that you know would void or prejudice the interests of the mortgage company
- the limit of indemnity must meet the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
- you must point out to the mortgagor that the borrower will need to comply with any conditions of the deed of postponement indemnity insurance policy and that the mortgagor should notify the mortgage company of any notice or potential claim in respect of the insurance
- your practice must send a duplicate of the deed of postponement indemnity insurance to the mortgagor and explain to the mortgagor why the deed of postponement indemnity insurance policy was effected and that additional insurance may be mandatory if there is supplemental lending against the mortgaged property
- your practice must approve the terms of the deed of postponement policy on behalf of the bank
- the deed of postponement indemnity insurance policy should be effected without charge to the lender
| Lender | Requirement |
|---|---|
| Accord Buy to Let | An amount at least equal to the amount of the mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgagee. |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| Coventry Building Society | Minimum of the value of the property. |
| Dudley Building Society | Purchase price or valuation, whichever is higher. |
| Fleet Mortgages | An amount at least equal to the valuation of the property. |
| Foundation Home loans | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Hampden | The open market value of the property according to the valuation report. |
| Harpenden Building Society | 110% of mortgage advance |
| ITL Mortgages | Minimum of the value of the property. |
| JPMorgan | 110% of principal sum. |
| Kensington Mortgage | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| Lloyds TSB Scotland | The value of the property |
| National Westminster Bank | An amount equal to the value of the property. |
| Pepper Money | An amount equal to at least 110% of the purchase price or value, whichever is higher. Any indemnity insurance policy must be for our benefit, that of any transferee/assignee (legal or equitable) of the mortgage and also the borrower(s). |
| Perenna | The higher of the purchase price or valuation. |
| Principality Building Society | Full market value of the property is preferred but if this is not available we will accept the loan advance amount as minimum. You must approve the policy on our behalf. The estimated property value is stated in the Mortgage Offer in remortgage cases. Otherwise it will be stipulated in the Valuation. |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
| TSB | The value of the property |
| RBS - Direct Line | An amount equal to the value of the property. |
| Together Personal Finance | Minimum of £2,000,000.00 per claim. |
General Deed of Postponement indemnity insurance points to consider
The full terms, conditions and exclusions for deed of postponement indemnity insurance are explained in the policy document. Property lawyers are obliged to point the borrower to the deed of postponement indemnity insurance policy itself. The intention of deed of postponement indemnity insurance is to afford indemnity in respect of the risks specified in the policy schedule - so it is essential check any draft to determine that it is as it should be. The lifetime of this non-investment insurance contract is in perpetuity unless otherwise stated in the deed of postponement indemnity insurance policy. Adequacy in this regard should be checked.Deed of Postponement Contingency insurance: Important aspects and benefits:
The insurance will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the deed of postponement indemnity insurance schedule. Deed of Postponement indemnity insurance Policies should be checked for the following- Expenses for works (including professional fees) for the purpose of the development commenced, before the commencement of proceedings for the enforcement of the risks specified in the deed of postponement insurance, to the extent that such costs are rendered abortive by court decision.
- All sums paid with consent in writing from the insurance company to liberate the property from the risks specified in the deed of postponement indemnity insurance.
- Cover for compensation incurred in any action regarding the risks specified in the deed of postponement indemnity insurance, including fees of a legal nature.
- The out of pocket expenses of altering or destroying all, or part of the development and the reinstatement of the land, insofar as such alteration, demolition or re-instatement is made necessary by court order.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
- Diminution in value due to the successful enforcement of the risks specified in the deed of postponement indemnity insurance.
As is the case with all conventional insurance, all material information needs to be disclosed to the insurance company at the outset and throughout the policy term, otherwise the deed of postponement policy will not be valid.
Other considerations for deed of postponement indemnity insurance
Deed of Postponement Indemnity policies can provide effective protection, but non-lender clients should be asked to give pause for thought and consider that the consequences of not being able to enjoy the property as anticipated may mean that deed of postponement indemnity cover will not necessarily be the answer. Information provided on this webpage is for general information for Regulated law firms in England and Wales on the the bank approved panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the bank indemnity insurance. Whilst we endeavour to keep the information up to date and correct we do not make any representation or warranties of any kind about its completeness, accuracy, reliability or suitability. Any reliance you place on the information is strictly at your own risk. Lexsure will not be liable for any direct or indirect loss or damage arising out of or in connection with the use of this information.
An important exclusion applying to most deed of postponement Policies is if you make any contact with any party who might cause a claim under the Policy, it can invalidate the cover.
The content set out above covers to properties in England and Wales.